Introduction
This page summarizes the results of a survey of small rental property owners conducted by Nat Decker of the Terner Center for Housing Innovation at UC Berkeley. Firstly, I want to thank everyone who participated in the survey. As I mentioned in the initial postcard, the owners of small rental properties are not well understood by either academics or policymakers and your answers to these questions will help show the real picture of small rental property ownership. I also want to provide additional thanks to everyone who agreed to participate in a follow-up interview. I truly appreciate your generosity with your time.
The survey was solicited by mail and conducted online from March to August 2019. The table below shows the response rate for the survey. A total of 53,000 owners were solicited for the survey. Solicitations consisted of an initial invitation to the online survey via postcard and two rounds of follow-up reminders, also via postcard. The survey consisted of approximately 150 questions covering a broad range topics including the characteristics of the rental properties, tenants, and owners and detailed questions about the decision-making processes for managing and investing in rental properties. Collectively 1,949 solicitations were found to be undeliverable. 1,109 owners logged on to the survey. 155 of these owners were found to not be part of the sample population (e.g. the respondent had recently sold their rental property or the property was never a rental). 836 respondents clicked through the entire survey and the remaining 273 ended the survey prematurely. Not all respondents who clicked through the entire survey answered all applicable questions. The final response rate, including partial responses, was 1.8%. Collectively, respondents owned 17,037 units.
The Survey Response Rate Was Low
| Total Sample |
53,000 |
100 |
| Bad Addresses |
1,949 |
3.7 |
| - |
|
|
| Survey Starts |
1,109 |
2.1 |
| Out of Population |
155 |
0.3 |
| Partial Responses |
259 |
0.5 |
| Click Throughs |
695 |
1.3 |
| - |
|
|
| Click Throughs + Partial |
954 |
1.8 |
In addition to the survey I conducted 161 interviews to develop a more detailed understanding of small rental property owners. Interviews were solicited at the conclusion of the online survey and conducted via phone in the weeks after the respondent completed the survey. Interviews generally lasted from thirty minutes to an hour and covered basic information such as the owner’s portfolio size, the markets they operated in, and their properties and tenants, and more detailed discussions of their acquisition, financing, rent-setting, maintenance, and tenant selection strategies, and their tenant screening procedures. These conversations are not summarized here.
The summary below provides a chart or table of how survey-takers answered each question on the survey. Not every survey question is summarized, as a few questions are not very interesting in isolation (e.g. the number of bedrooms of the unit surveyed) or had very few responses. Note that the total number of responses varies from question to question because of incomplete surveys. Some of the questions are cross-tabulated with the portfolio size of the owner. The distribution of survey takers by portfolio size is shown below:
Most Respondents had more than 2, but less than 50 units
| 1-2 units |
185 |
| 3-10 units |
606 |
| 11-50 units |
240 |
| >50 units |
78 |
How to read the charts
This summary uses three kinds of charts to present the responses to the survey questions. All charts have subtitle that identifies the survey question. Some charts also have a title that summarizes a conclusion that I think can be made from the responses to the question. The chart below is a bar chart with count data. I use this chart to summarize the responses to multiple choice questions, including questions where the owner could check multiple answers. In these charts the length of each bar represents the number of survey respondents who choose each answer. So, for example, almost exactly 600 respondents reported owning a “single family detached house”, whereas only about 100 reported owning a “single family attached house, rowhouse or townhouse.”
The chart below is a bar chart with percent data. This chart type also summarizes the responses to multiple choice questions, but is meant to show a contrast between owners with different portfolio sizes. Instead of showing the number of respondents who selected each answer, this chart shows the proportion of owners in each category who chose a particular answer. So, for example, about 80% of owners with 1-2 rental units held the surveyed property under their own name (as opposed to setting up a corporation to hold the properties), whereas only about 30% of owners with more than 50 rental units held the surveyed property under their own name. When response rates for questions are low, I sometimes don’t divide up the responses by portfolio size and show only 1 bar.
The chart below is a box-plot or box-and-whisker plot. This chart type summarizes the responses to questions where the respondent entered a numeric value, such as a price, a date, or rent. The box-plot shows the distribution of responses with a white box with a horizontal line through it, two vertical lines extending out from the box, and, sometimes, a few points beyond the end of the lines. The horizontal line in each box shows the median, or middle, response. The ends of the box shows the 25th percentile (bottom of the box) and the 75th percentile (top of the box). The vertical lines (or “whiskers”) extending out from the box show the nearest value that is no further than one-and-a-half times the distance between the 25th percentile and the 75th percentile (the bottom and top of the box). Responses that are higher or lower than these values are shown as dots.
The chart below shows the purchase prices of the surveyed properties, grouped by the portfolio of the owner. This plot tells us that the middle price paid by a respondent with 1-2 properties was about $150,000. Only 25% of these small portfolio owners paid less than about $60,000 for the surveyed property (the bottom of the box), and only 25% of small portfolio owners paid more than $210,000 (the top of the box). All except three small portfolio respondents paid between $25,000 and $440,000 (the bottom and top of the whiskers). One small portfolio owner paid $490,000 for their surveyed property, but this is an outlier (a dot).
What kinds of properties were surveyed?
The survey was limited to the owners of small rental properties. Condominiums were included, as each condominium unit is its own property. Cooperative units were included as well, though only 2 respondents were asked about a cooperative unit. Most of the survey respondents owned a single-family detached house. While the sample was drawn from properties that were identified as having less than 5 units, a few surveyed properties were larger.
Who Were the Surveyed Owners?
The owners who responded to the survey were quite diverse, reflecting some of the diversity of owners nationwide. Most owners held their properties under their own name, but larger owners were more likely to hold their properties in a corporate entity (mostly LLCs). Individual owners were mostly over 60 years old, male, and white, though younger, female, and non-white owners were not uncommon.
While no institutional investors responded to the survey (the largest portfolio was 465 units) there were substantial differences in the extent to which rental properties were a major part of the owner’s professional life. Small portfolios, for the most part, meant that owners spent relatively little of their work-week managing their properties, whereas portfolios of 50 units or more typically required half or all of individual’s working hours. Large-scale owners also were more likely to be real estate professionals, while smaller-scale owners often were retired, or had full- or part-time employment in field that were unrelated to real estate. Larger-scale owners tended to also be wealthier and higher-income than small portfolio owners.
What are the tenants like?
Larger-scale owners were more likely to hold properties at the lower end of the market, with lower purchase prices, lower rents, lower-income tenants, and are more likely to have a tenant with a section 8 voucher. There didn’t appear to be substantial differences in the range of time tenants lived in their units.
Section 8 vouchers
Larger-scale owners reported having more experience with section 8 voucher tenants. They were more likely to currently have voucher tenants, to have had a voucher tenant in the past, and to accept a new tenant with a voucher. For owners who reported being wary of having a section 8 voucher tenant, most reported being concerned about the regulations and paperwork of the program and the quality of voucher tenants.
Local Policies
Public regulations and policies were rarely cited as a an operational hindrance, except for property taxes. 20% to 40% of owners reported having their unit inspected in the past 2 years and 86% of owners who reported having an inspection passed the inspection.
